Never mind that, say the developers of the factory building. It is in an up-and-coming neighborhood of New Jersey’s notoriously shabby capital city, three blocks from the brick streets of historic Mill Hill, an area now so fully restored that visitors might think they have stumbled into Georgetown in central New Jersey.

“This has to be the last place within an hour of Manhattan where you can get a fantastic new apartment with historic character and extraordinary architecture for under $300,000,” said Michael Goldstein, one of three partners of HHG Development, the local company that is creating the lofts.

In fact, it is possible here only because of a state program for bolstering development of “transitional areas.” The Housing Mortgage Finance Agency sponsors the program, which grants construction subsidies to developers, averaging about $75,000 per unit in this case, to encourage them to undertake high-quality projects in areas where market sales prices would otherwise be too low to justify the effort.

“The bottom line,” Mr. Goldstein said, “is that these units are being sold for less than HHG’s cost.”

Two of 18 condominiums being created in the Victorian cracker-baking factory are reserved for low-income buyers; there are no income restrictions for other purchasers — and four sales contracts were signed on market-rate units before all the interior walls were framed. Four of eight units in a smaller HHG development three blocks away also have signed contracts.

It may that Trenton, set roughly halfway between New York and Philadelphia, is somewhat insulated from market sluggishness, said Sasa Montano, the city’s economic development chief. “We don’t have large-scale development flooding the market with units, for one thing,” she said. “We have small and medium-sized developments, like this one in a neighborhood that is already established and is going to have the redeveloped train station within walking distance — it should be finished within a few months — and a planned new school, and a large fresh-foods grocery store is also set to go in.”

It has been 44 years since Mayor Arthur Holland of Trenton made front page news in The New York Times by moving into a ramshackle row house in Mill Hill to demonstrate his commitment to reviving it. Now, Trenton officials make much of the fact that all three of HHG’s partners live in Mill Hill, which is a short walk from the Ferry Historic District where the redevelopment is under way.

Jim Coston, who is both the pastor of a neighborhood church and a city councilman, noted that he helped lead the charge against a previous plan to demolish all the buildings on a six-block parcel — including both buildings that HHG is now renovating. The plan had been to put in a “big, cookie-cutter condo development,” he said, adding that now, he and his parishioners believe “exactly the right thing is happening.”

The former Exton oyster cracker factory, which in more recent years served as a surplus storage warehouse, is a “glorious space,” in the words of Ms. Montano, and “the coolest building in Trenton,” according to a rival developer, Dan Dodson of Trenton Lofts, who at one time was also interested in renovating it.

The individual units in the new condo, now called the Cracker Factory, will have some extraordinary features: The most expensive, the two-bedroom listed at $285,000, has 10 tall windows along two sides of its top floor, looking out over the corner of Centre and Furman Streets.

A 1,700-square-foot one-bedroom unit will contain two of the original factory’s barrel-vaulted brick ovens, with one serving as the bedroom; that unit also has the bakery’s original tile floors, and offers an additional 1,103 square feet of living space below, opening to a private garden. The unit is priced at $255,750.

“Could there be a more unusual place to live in New Jersey? In the Northeast? Or really, anywhere?” asked Mr. Goldstein as he showed off the half-built apartment’s oven rooms.

The surrounding area also has the value of historic standing, said John Hatch, an architect specializing in historic preservation and another HHG partner. The tide of the American Revolution is said to have turned during the first Battle of Trenton; the second Battle of Trenton was fought at Assunpink Creek in Mill Hill, Mr. Hatch said.

He and David Henderson, a fellow architect who is the third partner in HHG, have worked together since 1994 in restoring more than a dozen residences in Mill Hill. They created the first “luxury” condo in Trenton out of an old labor organization hall.

Mr. Hatch, who is also a partner in the firm of Clarke Caton Hintz and involved with the New Jersey Historic Trust and other preservation groups, restored Morven, the former governor’s mansion in Princeton. He serves as HHG’s preservation specialist.

Mr. Henderson, who designed Trenton Makes, an arts-related complex that includes live-work space, shops and galleries, supervises HHG’s project construction and is constantly at the Cracker Factory site, where work will finish sometime in the fall.

Mr. Goldstein, a former high-tech business executive whose wife, June Ballinger, is the director of the Passage Theater Company in Trenton, joined his partners three years ago to work on projects in the Ferry district — “the next great neighborhood,” he said.

Both Sovereign Bank Arena and the Mercer County Sports Complex are blocks away. The entrance to Route 1 is less than a mile from the Cracker Factory. And the theater company is also close, said Mr. Goldstein.

Plus,” he added, “the area is Starbucks-free — and some people appreciate that.”

The second HHG project will create eight more condo apartments in a cluster of three small buildings a block and a half from the Cracker Factory.

That project, called Everett Corner, will also offer wood moldings and exposed brick.

At both the Cracker Factory and Everett Corner, HHG will install solar power panels in the common areas, and provide the option of solar panels to purchasers of individual units.

A version of this article appears in print on , on page RE2 of the New York edition with the headline: From Transition to Revival in Trenton. Order Reprints|Today's Paper|Subscribe